red meat and poultry outlook curt lacy extension economist-livestock
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Red Meat and Poultry Outlook
Curt Lacy
Extension Economist-Livestock
Red Meat and Poultry Outlook
Southern Region Outlook Conference
September 24, 2008
Overview Current meat S&O Beef S&O Pork Poultry
Livestock producers’ situation
Red Meat and Poultry Outlook
Southern Region Outlook Conference
September 24, 2008
Red Meat and Poultry in Cold Storage Total number 9%
higher compared to 07.
Red meat unchanged Beef -9% Pork +8%
Poultry +16% Chicken +12% Turkey +23%
0.00
0.50
1.00
1.50
2.00
2.50
Millions
JAN MAR MAY JUL SEP NOV JAN MAR MAY JUL
BEEF PORK POULTRY
Red Meat and Poultry Outlook
Southern Region Outlook Conference
September 24, 2008
Pork and Beef prices are higher compared to last year. Pork cutout has
been record high lately Major strength
from hams and loins.
Ribs and bellies are off from 2007.
HOG CUTOUT VALUEWeekly
55
60
65
70
75
80
85
90
95
100
JAN
APRJU
LO
CT
$ Per Cwt.
Avg.2002-06
2007
2008
Red Meat and Poultry Outlook
Southern Region Outlook Conference
September 24, 2008
Pork and Beef prices are higher compared to last year. Beef below last
year for most of 2008.
High likely occurred in early July.
BOXED BEEF CUTOUT VALUEChoice 600-900 Lbs. Carcass, Weekly
125
135
145
155
165
175
185
JAN APR JUL OCT
$ Per Cwt.
Avg.2002-06
2007
2008
Red Meat and Poultry Outlook
Southern Region Outlook Conference
September 24, 2008
Broiler wholesale prices have also been strong. SOME cost
increases have been passed on .
However, pressure from pork and beef has prohibited passing all of those costs along.
BROILER PRICES12-City Composite, Weekly
60
65
70
75
80
85
90
JAN
APRJU
LOCT
Cents Per Pound
Avg.2002-06
2007
2008
Red Meat and Poultry Outlook
Southern Region Outlook Conference
September 24, 2008
TOTAL RED MEAT & POULTRY PRODUCTIONQuarterly
0.0
20.0
40.0
60.0
80.0
100.0
Avg. 2002/06 2007 2008
Bil. Pounds
OCT-DEC
JUL-SEP
APR-JUN
JAN-MAR
M-S-3107/14/08
Total Meat Supplies are Higher Total + 4.7% YTD
compared to 2007. Beef = +2.0% Poultry +4.4% Pork +9.5%
Red Meat and Poultry Outlook
Southern Region Outlook Conference
September 24, 2008
Short Story More meat. Higher prices earlier in the year. However, a weak economy and
burdensome supplies in Q2 and Q3 have conspired to depress wholesale prices.
Red Meat and Poultry Outlook
Southern Region Outlook Conference
September 24, 2008
Beef Cattle Situation & Outlook
Red Meat and Poultry Outlook
Southern Region Outlook Conference
September 24, 2008
Feeder Cattle Situation – A Tale of 2 Weights
MED. & LRG. #1 & 2 STEER CALF PRICES400-500 Pounds & 700-800 Pounds, Georgia, Weekly
75
80
85
90
95
100
105
110
115
120
125
JAN
APRJU
LOCT
$ P
er C
wt.
700-800 400-500
Prices for calves and feeders have almost converged
Red Meat and Poultry Outlook
Southern Region Outlook Conference
September 24, 2008
CATTLE ON FEEDUS Total, Monthly
9.5
10.0
10.5
11.0
11.5
12.0
12.5
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
Mil. Head
Avg.2002-2006
2007
2008
C-N-1009/19/08
Livestock Marketing Information Center
Data Source: USDA/NASS
Red Meat and Poultry Outlook
Southern Region Outlook Conference
September 24, 2008
C-N-0807/25/08
Livestock Marketing Information Center
Data Source: USDA/NASS
Lower Cattle Supplies in the Fall
NET FEEDLOT PLACEMENTSUS Total, Monthly
1.4
1.6
1.8
2.0
2.2
2.4
2.6
2.8
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
Mil. Head
Avg.2002-06
2007
2008
Net Placements lower.
Feeders weighing more than 800# up.
Feeders weighing less than 600# down.
Red Meat and Poultry Outlook
Southern Region Outlook Conference
September 24, 2008
Projections for Remainder of 2008 and Early 2009
Quarter 400-500# Steers*
700-800# Steers*
Live Cattle
(5 Area)
Cull Cows*
85-90%
Q3-2008 $99-$105 $92-$98 $90-$95 $52-$58
Q4-2008 $90-$98 $85-$93 $85-$93 $42-$48
Q1-2009 $100-$110 $85-$95 $93-99 $46-$54
Q2-2009 $105-$120 $95-$103 $100-$107 $52-$60
Red Meat and Poultry Outlook
Southern Region Outlook Conference
September 24, 2008
2008/2009 Summary An improved economy would help beef
demand. Larger total meat supplies in Q3 and Q4
could be troublesome. Corn crop (prices) vs. Live Cattle prices will
continue to drive the train for feeder cattle prices.
Red Meat and Poultry Outlook
Southern Region Outlook Conference
September 24, 2008
Marketing Alternatives This Summer and Fall
Current pricing scenario favors adding as much weight as possible.
Stockering or backgrounding may be economical.
Retained ownership may be profitable this year.
Red Meat and Poultry Outlook
Southern Region Outlook Conference
September 24, 2008
BEEF COWS THAT HAVE CALVEDJANUARY 1, 2008(1000 Head)
1,020 to 5,240 (9)520 to 1,020 (11)290 to 520 (9)
80 to 290 (11)0 to 80 (10)
C-N-1502/01/08
677Alaska
Hawaii
US Total
5.9
165 943
655730
CT 6
DE 4
936
553
82.7
460
427234
1015
1511 1159
513
12
MD 44
MA 9106
397
519
2080
1523
1883218
NJ 9
460
104
372
922
292
2053
605
158RI 1.4
197
1644
1079
5240
365
VT 10
692
272
202
270
733
32553
Livestock Marketing Information Center
Data Source: USDA/NASS
NH 5
CHANGE IN BEEF COW NUMBERSJANUARY 1, 2007 TO JANUARY 1, 2008(1000 Head)
2 to 141 (13)1 to 2 (3)
-6 to 1 (13)-25 to -6 (11)-74 to -25 (10)
Alaska
Hawaii
US Total
C-N-2802/01/08
-40-1
-10 22
-455
CT -1
DE 0
-14
-32
-3
-13
0 0-55
11 -48
23
1
MD -6
MA 2
-2
-8
1
-66
141
-57-15
1
NJ 1
20
-8
-20
-17
-4
30
8RI -0
-6
-25
-74
-63
21
0
-18
7
-10
5
-30
-339
Livestock Marketing Information Center
Data Source: USDA/NASS
53
Red Meat and Poultry Outlook
Southern Region Outlook Conference
September 24, 2008
JULY 1 BEEF COW INVENTORYU.S., Annual
25
30
35
40
45
50
1975 1978 1981 1984 1987 1990 1993 1996 1999 2002 2005 2008
Mil.
Hea
d
C-N-4601/30/06
Livestock Marketing Information Center
Data Source: USDA/NASS
Points to a January 1,2009 number lower than January 1, 2008
Red Meat and Poultry Outlook
Southern Region Outlook Conference
September 24, 2008
C-S-3407/18/08
Drought and high inputs continue to cause herd reductions
BEEF COW SLAUGHTERFederally Inspected, Weekly
40
45
50
55
60
65
70
75
80
JAN
APRJU
LOCT
Thou. Head
Avg.2002-06
2007
2008
Red Meat and Poultry Outlook
Southern Region Outlook Conference
September 24, 2008
CALF CROPU.S., Annual
30
35
40
45
50
55
1946 1951 1956 1961 1966 1971 1976 1981 1986 1991 1996 2001 2006
Mil. Head
Livestock Marketing Information Center
Data Source: USDA/NASS
Fewer Cows = Smaller Calf Crop Fewer Supplies
Smallest calf crop since 1952
Red Meat and Poultry Outlook
Southern Region Outlook Conference
September 24, 2008
Fertilizer Prices 1997-2008 (and 2009)
$100
$300
$500
$700
$900
$1,100
$1,300
$1,500
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
Apr-0
8
May
-08
Sep-
08
Jan-
09
$/
ton
Nitrogen (AN) Phosphorous (DAP) Potash (Muriate)
Red Meat and Poultry Outlook
Southern Region Outlook Conference
September 24, 2008
Fuel Prices 1997-2008
$0.00$0.50$1.00$1.50$2.00$2.50$3.00$3.50$4.00$4.50
$/
Gallo
n
Diesel (bulk)
Red Meat and Poultry Outlook
Southern Region Outlook Conference
September 24, 2008
Impact of Fuel & Fertilizer Prices on Cost of Production
$20
$40
$60
$80
$100
$120
$140
2002 2008
500# Calf ($/ Cwt.) Hay ($/ ton)
Red Meat and Poultry Outlook
Southern Region Outlook Conference
September 24, 2008
Incentives to Expand Beef Herd
Red Meat and Poultry Outlook
Southern Region Outlook Conference
September 24, 2008
Incentives to Expand Beef Herd
Red Meat and Poultry Outlook
Southern Region Outlook Conference
September 24, 2008
Projected Prices 2009 and Beyond
$40
$50
$60
$70
$80
$90
$100
$110
$120
$130
2009 2010 2011
GA 500# steer GA 750# steer Choice fed steer GA Slaughter cow
Source: USDA, LMIC and UGA
Red Meat and Poultry Outlook
Southern Region Outlook Conference
September 24, 2008
Other Issues Southeast
More reliant on fertilizer Wider basis Increasing land values
Increasing demand for beef from alternative production systems Natural Organic Grass-fed
Increasing demand for locally produced foods Animal welfare MCOOL/NAIS
Red Meat and Poultry Outlook
Southern Region Outlook Conference
September 24, 2008
Pork Situation & Outlook
Pork Situation
Red Meat and Poultry Outlook
Southern Region Outlook Conference
September 24, 2008
Pork Situation Record supplies in 2008. UNBELIEVABLE export demand has
supported prices. Historically high input prices have certainly
taken a toll on profits.
Red Meat and Poultry Outlook
Southern Region Outlook Conference
September 24, 2008
Returns to farrow-finish hog producers have been negative for most of the past year!
-40
-30-20
-10
010
20
3040
50
2004
May Sep
2005
May Sep
2006
May Sep
2007
May Sep
2008
May
Source: IA State University
Red Meat and Poultry Outlook
Southern Region Outlook Conference
September 24, 2008
HOG SLAUGHTERFederally Inspected, Weekly
1,500
1,700
1,900
2,100
2,300
2,500
Thou. Head
Avg.2002-06
2007
2008
H-S-0509/12/08
Red Meat and Poultry Outlook
Southern Region Outlook Conference
September 24, 2008
PORK PRODUCTIONFederally Inspected, Weekly
280
330
380
430
480
530
Mil. Pounds
Avg.2002-06
2007
2008
M-S-1909/15/08
Red Meat and Poultry Outlook
Southern Region Outlook Conference
September 24, 2008
Livestock Marketing Information Center
BARROW AND GILT PRICESIowa - So. Minnesota, Carcass Base Price, Weekly
45
50
55
60
65
70
75
80
85
90$ Per Cwt.
Avg.2002-06
2007
2008
H-P-0908/14/08
Red Meat and Poultry Outlook
Southern Region Outlook Conference
September 24, 2008
U S NET PORK EXPORTSCarcass Weight, Monthly
30
80
130
180
230
280
330
380
430
480
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
Mil. Pounds
Avg.2002-06
2007
2008
I-N-3209/12/08Livestock Marketing Information Center
Red Meat and Poultry Outlook
Southern Region Outlook Conference
September 24, 2008
Pork Summary Record supplies of pork in 2008. Supplies will be reduced some in 2009. Packing capacity may be a concern this fall. Prices will be pressured this fall. Prices should be stable to higher next year. High input prices will continue to plague
producers.
Poultry Situation and Outlook
Red Meat and Poultry Outlook
Southern Region Outlook Conference
September 24, 2008
Livestock Marketing Information Center
BROILER PRICES12-City Composite, Weekly
60
65
70
75
80
85
90Cents Per Pound
Avg.2002-06
2007
2008
P-P-0109/16/08
Red Meat and Poultry Outlook
Southern Region Outlook Conference
September 24, 2008
These prices do not tell the whole story! Breast prices are
running 10.5% lower than last year.
Leg and wing prices are carrying the water for broilers this year.
Exports have played a major role in moving the dark meats.
WHOLESALE CHICKEN BREAST PRICESSkinless/Boneless, Northeast, Truckload, Weekly
110
120
130
140
150
160
170
180
JAN
APRJU
LO
CT
Cents Per Pound
Avg.2002-06
2007
2008
WHOLESALE CHICKEN LEG PRICESNortheast, Truckload, Weekly
35
40
45
50
55
60
65
70
75
80
JAN
APRJU
LO
CT
Cents Per Pound
Avg.2002-06
2007
2008
Red Meat and Poultry Outlook
Southern Region Outlook Conference
September 24, 2008
US Broiler Exports, Annual
0
1
2
3
4
5
6
7
8
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09
Bill
ion
Po
un
ds
RT
COther
Romania
Korea
Ukraine
Cuba
Lithuania
Angola
Taiwan
Turkey
Canada
Mexico
China
Russia
© EMI Analytics, All Rights Reserved
July 2008 forward EMI Analytics forecast
Red Meat and Poultry Outlook
Southern Region Outlook Conference
September 24, 2008
What’s the impact of higher feed-grain prices on broilers? Since 2006
Corn prices up 67% Soybean meal
prices up 206%
Broiler costs up 137%.
US Broiler Production Cost (WOG basis)EMI Analytics model, weighted average, with OH & interest
45
50
55
60
65
70
75
80
85
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
cen
ts/lb
2006 avg. 60 cents2007 avg. 68 cents2008 avg. 81 cents2009 avg. 82 cents
Sept 2008 forward forecast
© EMI Analytics, All Rights Reserved
Red Meat and Poultry Outlook
Southern Region Outlook Conference
September 24, 2008
US Broiler Average Profitability Indexspot market prices, EMI Analytics model
-15
-10
-5
0
5
10
15
20
25
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
ind
ex
(1
99
8-2
00
0 b
as
e)
Sept 2008 forward forecast
© EMI Analytics, All Rights Reserved
Red Meat and Poultry Outlook
Southern Region Outlook Conference
September 24, 2008
Production will be lower the rest of the year. Broiler egg sets down. Broiler chick placements down. Total production for 2008 will be up “only” 2.3%. Will actually see a decrease in production in 2009.
8200
8400
86008800
9000
9200
9400
9600
2006 2007 2008 2009 2010
Quarterly Broiler Production Projected
Red Meat and Poultry Outlook
Southern Region Outlook Conference
September 24, 2008
Poultry Price Forecast Broiler prices should remain in the lower
$80s. Breast prices will continue to struggle. Legs and wing prices should stabilize. HOWEVER, disruptions in the export
market could be very problematic.
Red Meat and Poultry Outlook
Southern Region Outlook Conference
September 24, 2008
TOTAL RED MEAT & POULTRY PRODUCTIONQuarterly
19.0
20.0
21.0
22.0
23.0
24.0
JAN-MAR APR-JUN JUL-SEP OCT-DEC
Bil. Pounds
Avg.2002/06
2007
2008
2009
M-S-3107/14/08
Red Meat and Poultry Outlook
Southern Region Outlook Conference
September 24, 2008
Red Meat and Poultry Summary Record meat supplies this year. Q3-Q4 could be a big problem for pork supplies. Smaller beef, pork and poultry supplies in 2009. Exports for all meats continue to be favorable. All meat prices should remain steady to
improving for the remainder of this year and next year.
HOWEVER, if the economy continues to weaken all bets are off.
Red Meat and Poultry Outlook
Southern Region Outlook Conference
September 24, 2008
QUESTIONS?